Old National Bancorp Q3 FY2025 earnings call

• Jim Ryan highlighted strong third quarter performance at or above guidance across major income statement line items, with improved credit metrics and a sub-50% efficiency ratio. He noted industry credit cracks are manageable and Old National is well reserved, capitalized, and has robust results.
• Old National is building a stronger franchise by leveraging market position, investing in itself, and recruiting top-tier talent, accelerating talent conversations across its footprint.
• The company successfully completed the systems conversion and branding for the Bremer Bank partnership, now operating as Old National. John Moran discussed balance sheet trends, including loan growth, deposit growth, net interest income outlook, credit trends showing lower criticized and classified loans, and the capital position with CET1 over 11%.

Old National Bancorp delivered strong third quarter 2025 results. GAAP earnings per share were $0.46, with adjusted earnings per share at $0.59, an 11% increase over the prior quarter and 28% year over year. The company achieved an adjusted 20% return on average tangible common equity, a 1.3% plus ROA, and a sub-50% efficiency ratio. Credit metrics improved with provision and charge-offs aligning with expectations, and a meaningful decline in thirty-plus day delinquencies and criticized/classified loans. Total deposits increased 4.8% annualized with core deposits ex brokered up 5.8% annualized. Loan to deposit ratio was 87%, and average loan balances exceeded second quarter's end of period balances by nearly $300,000,000.

• Full year 2025 loan growth excluding Bremer is expected to be 4%-5%.
• Fee income guidance increased due to strong third quarter performance. NII is expected to be stable to improving in 2025, with assumptions of two additional 25 basis point rate cuts in 2025, a five-year treasury rate stabilizing at 3.55%, and a total down rate deposit beta of approximately 40%.

• Discussions about potential credit cracks in the industry, but Old National views these as manageable within normal long-term operating conditions. Post-Bremer partnership, there is normal attrition in certain loan portfolios that Old National doesn't plan to continue operating.

Q: Scott Siefers asked about the reduction in NII expectations for the fourth quarter.

A: John Moran said it's a stable situation with dynamics like five-year rates and launch point being lower than expected, but still good for a $65,000,000,000 earning asset base.

Q: Scott Siefers asked about M&A and share repurchases.

A: Jim Ryan said the best acquisition is in themselves, will be opportunistic on buybacks, threading the needle between building capital and returning it to shareholders.

Q: Jared Shaw asked about loan sales post-Bremer and systems conversion.

A: Jim Ryan said it's normal attrition in loan portfolios not planned to continue, systems conversion went well with client sentiment high, and merger charges are normal with more in future quarters but full run rate savings in first quarter next year.

Q: Ben Gerlinger asked about loan growth guide and reinvestment.

A: John Moran said legacy Old National Bank pipelines are up close to 40%, and they plan to hire talent and invest while being efficient.

Q: Brendan Nosal asked about loan yield increase.

A: John Moran said fixed asset repricing drove bulk of loan yield improvement, fair value mark relatively unchanged, and credit component added about one basis point.

Q: Terry McEvoy asked about NDFI loans and proactive portfolio actions.

A: Jim Ryan said it's old fashioned basic banking, focusing on known and trusted clients, and John Moran said total accretable was relatively unchanged.

Q: Brian Foran asked about Bremer loan growth and deposit growth.

A: Jim Ryan said Bremer should contribute similarly to Old National's growth, and deposit growth should have similar trajectory going forward.

Q: Chris McGratty asked about capital buyback and NII growth.

A: Jim Ryan said there's tension between capital growth and returning to shareholders, and John Moran said NII will grow in 2026 depending on yield curve dynamics.

Q: Jeanette Lee asked about Bremer loan runoff and fee income.

A: John Moran said Bremer loan runoff is normal, and fee income was strong in third quarter but expects some normalization.

Q: Jon Arfstrom asked about Bremer-related efficiencies and credit environment.

A: John Moran said Bremer-related efficiencies will be more evident in first quarter next year, and John Moran described credit as stable to improving.